President Donald Trump's campaign in 2016 and then 2020 often was centered around a sense of populism and anti-establishment viewpoints. Trump often promoted laissez-faire capitalism and pro-business non-intervention policies in his 2016 run to become president. Although Trump is no stranger to going back on his word as we’ve repeatedly seen with his 2025 tariff negotiation strategy, his new policies and interventionist authoritarian-populist style of governing is a new level of reneging. An authoritarian leader often rejects opposition (firing head of BLS because of negative jobs report), spreads disinformation as a smoke screen from his own violations (focusing on the feds cost overruns in their building reconstruction instead of his family monetarily using the presidency as a money making crypto scheme), incites violence to undermine norms of democracy (January 6th ring any bells). And politicizes institutions (constant undermining of the Federal Reserve's policy making independence in order to coerce officials into getting what he wants). As you can see Trump has done all these, mostly in the year 2025 alone. Trump's constant intervention is not Republican in the traditional sense, in some cases it may not even be seen by some as democracy. Trump's constant attacks on the Fed in order to politicize a traditionally independent policy-setting institution is a way to build support for the loyalists he tries to hire in the Fed to get his policies passed. The point of central banks is to independently set policy for the good of the economy, not to do what the president wants. Taking the unpopular opinion can be better for the economy in the long term even if it hurts a bit now (ie… Then Fed chair Volcker setting rates super high in the 70/80s to stop ”the great inflation” period). If a central banker acts upon the president's wants we will have a repeat of Arthur Burns appeasing Nixon in the 70s which led to the “great inflation”. Trump isn’t a fan of the oft-cited economic theory of the “invisible hand”, he’d much rather use his own.
Equity Insights
↑Newmont(NEM): Newmont is heavily profiting off of gold's rise due to it being seen as a safe haven among investors worried about trade uncertainty and fed independence. Newmont is the world's largest gold mining company. Usually gold prices and bond yields have an inverse relationship but in today’s economy of uncertainty they are both likely to rise bringing Newmont's stock with them.
?Intuitive Surgical(ISRG): A biotech company that creates robotic and AI related products for surgery. On one hand its main product, the Da Vinci system aids in minimally invasive surgeries and its usage is growing year over year. On the other hand, tariffs could heavily affect ISRG as its supply chain is global.
Theme of the Week
Asset bubbles are defined as a situation where an asset's price exceeds its fundamental value by a large margin, typically caused by high speculation, irrational decisions, and FOMO. The inflated price(s) cannot be sustained and lead to a bubble burst in which prices rapidly fall. We all should be wary of the current bubble that may be going on; the AI bubble. Companies in this sector have been rising rapidly for a while now and every new hot tech IPO that has anything to do with AI seems to boom. As we’ve previously seen in the dotcom bubble of the 2000’s, only few companies will make it in the end.
The 10 largest companies by market value take up almost 40% of the total S&P, 8 out of 10 of these companies are AI related (Meta, Alphabet, Apple, Nvidia, etc). Along with this the S&P’s current p/e is 22.5, its average is 16.8, thus showing the overvaluation of these companies. It's getting harder to find retail and institutional investors not invested in these company’s. If these and other AI related companies go down it will be a bad day for most if not all investors. My advice to all those out there who are heavily invested into AI, take a moment to rethink your long positions.
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